IaaS, PaaS, SaaS and FaaS: Cloud Models Explained 

Before diving into IaaS, PaaS, SaaS, and FaaS, let’s clarify the playing field. 

When launching or replatforming an ecommerce solution, your cloud hosting model is one of the first, and most important, decisions to make. While serverless architectures like FaaS (Function as a Service) are gaining ground in tech circles, they’re still rarely used for core commerce workloads. That leaves three primary cloud service models at the heart of digital commerce infrastructure: IaaS, PaaS, and SaaS. 

We won’t rehash the now well-established case for moving away from on-premise servers. The cloud won that battle long ago. Today, the question isn’t whether to choose cloud, it’s which cloud model makes the most sense for your business, your team, and your growth goals. 

From hyperscalers like AWS, Microsoft Azure, and Google Cloud Platform, to national cloud providers and specialized vendors, businesses have more flexibility than ever — if they understand the strengths and trade-offs of each model. 

Let’s break them down. 

1. WHAT IS IAAS? (INFRASTRUCTURE AS A SERVICE)
2. WHAT IS PAAS? (PLATFORM AS A SERVICE)
3. WHAT IS SAAS? (SOFTWARE AS A SERVICE)
4. WHAT IS FAAS (FUNCTIONS AS A SERVICE)?
5. CLOUD SERVICE MODELS COMPARED: IAAS VS PAAS VS SAAS VS FAAS
6. HOW TO CHOOSE THE RIGHT CLOUD MODEL FOR YOUR BUSINESS?
7. CONCLUSION: MATCH CLOUD MODELS TO YOUR ECOMMERCE AMBITIONS

According to Flexera’s 2024 State of the Cloud Report, 94% of enterprises now use cloud services in some form, reflecting the near-total market penetration of cloud-based infrastructure and platforms. 

And the growth shows no signs of slowing. The global cloud computing market is projected to reach $1.6 trillion by 2030, driven by demand for scalable, cost-efficient digital infrastructure across industries. 

But if you’ve ever found yourself Googling "difference between IaaS and PaaS", or "examples of SaaS and PaaS in ecommerce", you’re not alone. These cloud models can sound confusing, and choosing the right one can impact your scalability, cost-efficiency, and speed to market. 

In this article, you’ll learn what each model really means, see real-world examples (from AWS EC2 to Virto Commerce), and understand how these options stack up for modern ecommerce platforms, from startups to enterprise-grade B2B solutions. 

By the end, you’ll be able to confidently compare IaaS vs PaaS vs SaaS vs FaaS, and choose the cloud model that actually fits your business.

IaaS is a cloud computing model that offers virtualized computing resources over the internet. In this model, cloud providers supply essential infrastructure components such as servers, storage, networking, and virtualization, allowing businesses to build and manage their own IT environments without the need to invest in physical hardware. 

• Scalability: Resources can be scaled up or down based on demand. 
• Cost-Efficiency: Operates on a pay-as-you-go model, converting capital expenditures (CapEx) to operational expenditures (OpEx). 
• Control: Users have control over operating systems, storage, and deployed applications. 
• Flexibility: Supports a wide range of operating systems and applications. 

According to Gartner, the global IaaS market grew by 16.2% in 2023, reaching a total of $140 billion, up from $120 billion in 2022. This growth is driven by the increasing demand for scalable and cost-effective cloud solutions across various industries. 

Major players in the IaaS market include: 

• Amazon Web Services (AWS): Leading with a 29% market share.  
• Services like Amazon EC2 (Elastic Compute Cloud) and Amazon S3 provide virtual machines, storage, and networking - classic Infrastructure as a Service. 
• Microsoft Azure: Holding a 22% market share. 
• Google Cloud Platform (GCP): At 12% market share.  
• Google Compute Engine is a good example of IaaS within the GCP ecosystem. 

By leveraging IaaS, companies can: 

✔️ Deploy Custom Applications: ASOS, a global online fashion retailer, uses Microsoft Azure IaaS to run custom-built services and APIs that support its scalable ecommerce operations. For instance, during a Black Friday event, ASOS's platform successfully managed 167 million site visits and processed up to 33 orders per second. 

✔️ Handle Traffic Spikes: During peak seasons like holiday sales, ecommerce sites face unpredictable surges in traffic. IaaS platforms such as AWS allow merchants to auto-scale server capacity based on demand. For example, Zalora, a fashion e-retailer in Asia, leverages AWS Elastic Load Balancing and Amazon EC2 Auto Scaling to manage traffic spikes without downtime. 

✔️ Enhance Security: With IaaS, businesses can configure their own firewalls, encryption standards, and compliance controls to protect sensitive customer data. Shopify, while primarily a SaaS provider, uses Google Cloud Platform IaaS capabilities for backend infrastructure that enables enhanced DDoS protection and data redundancy. 

✔️ Optimize Performance: IaaS providers offer global data centers, allowing ecommerce companies to host applications closer to their customers, reducing latency and improving load times. For example, Sephora uses Google Cloud infrastructure to deliver faster omnichannel experiences across regions by hosting services in data centers closer to key markets. 

While IaaS offers numerous benefits, you should consider the following: 

• Management Responsibility: Users are responsible for managing applications, data, runtime, middleware, and operating systems.
• Technical Expertise: Requires skilled IT personnel to manage and maintain the infrastructure. 
• Security and Compliance: You must ensure that your applications and data comply with industry regulations. 

PaaS is a cloud computing model that provides developers with a complete environment to develop, run, and manage applications without the complexity of building and maintaining the underlying infrastructure. In this model, cloud providers offer a combination of hardware and software tools over the internet, including operating systems, middleware, development frameworks, databases, and more. 

• Development Tools: Access to a suite of tools for application development, testing, and deployment. 
• Middleware Services: Integrated services such as databases, messaging systems, and authentication services. 
• Scalability: Automatic scaling of resources to handle varying workloads. 
• Multi-Platform Support: Support for various programming languages and frameworks. 

According to Gartner, global spending on PaaS is projected to reach $208.6 billion in 2025, up from $172.4 billion in 2024, marking a year-over-year growth of 21.6%. This surge is driven by the increasing demand for agile application development platforms, especially in the times of digital transformation and AI integration. 

Major PaaS providers include: 

• Microsoft Azure App Services: Offers a fully managed platform for building, deploying, and scaling web apps.
• Google Cloud Platform: Offers various PaaS products like App Engine and Cloud Run for developing scalable apps. 
• AWS: Provides services like Elastic Beanstalk and App Runner for deploying web applications without managing infrastructure. 

Virto Commerce is also an example of a composable ecommerce platform built using the PaaS model. It runs on Microsoft Azure and can also be deployed in a customer’s own cloud or on-prem environment. 

Unlike traditional SaaS ecommerce platforms that force you into fixed workflows, Virto Commerce offers a composable PaaS model designed to adapt to any business process or customer journey. Companies using Virto benefit from: 

• Custom architecture tailored to specific industries or verticals 
• 80+ pre-built modular capabilities (PBCs) that can be easily added, removed, or replaced to match business needs 
• Cloud-agnostic deployment with full control over data, workflows, and extensions 

For example, Virto’s client De Klok Dranken, the largest beverage wholesaler in the Netherlands, used Virto PaaS to create a highly customized B2B portal, resulting in 80% partner adoption in the first phase alone. 

By leveraging PaaS, companies can: 

Accelerate Development 

PaaS platforms offer pre-built components, development tools, and frameworks that boost the application development process. For instance, AWS Elastic Beanstalk allows developers to deploy applications quickly without managing the underlying infrastructure, supporting languages like Java, Python, and Node.js. 

Improve Customization 

With PaaS, businesses can tailor their ecommerce platforms to meet specific needs. Adobe Commerce (ex. Magento), for example, provides a PaaS environment where merchants have full access to edit the source code of their store, enabling extensive customization to align with unique business requirements. 

Improve Time-to-Market 

PaaS solutions reduce the time spent on routine maintenance and server management, allowing developers to focus on implementing new features and updates. This efficiency enables businesses to respond swiftly to market demands. For example, HEINEKEN utilized Virto Commerce to launch a mobile-first B2B platform across over 20 countries, achieving a 65% reduction in implementation costs and significantly expediting their digital transformation. 

Ensure Scalability 

PaaS platforms automatically scale computing resources based on application demand, handling increased traffic and transactions during peak shopping periods without infrastructure concerns. Services like Heroku and AWS Elastic Beanstalk allow developers to set scaling policies tied to metrics like CPU usage and memory consumption, ensuring scalability. 

While PaaS offers numerous benefits, you should consider the following: 

• Vendor Lock-in: Dependence on a specific provider's tools and services may limit flexibility.
• Customization Limits: While PaaS allows for customization, there might be constraints compared to building from scratch. 
• Security Concerns: Ensuring data security and compliance within the PaaS environment is crucial. 

SaaS is the most familiar cloud model, and arguably the easiest to adopt. With SaaS, the software is fully developed, hosted, and managed by the vendor. All you do is subscribe, log in via a browser, and start using it. There’s no need to worry about servers, installations, updates, or maintenance. 

In the context of ecommerce SaaS platforms, this model is a good choice for businesses looking for a fast, affordable way to launch an online store with minimal technical complexity. 

• Fully hosted and managed by the provider 
• Instant setup and deployment 
• Regular updates and backups handled automatically 
• Accessible via web or mobile interface 
• Typically offered as a subscription model 

• Shopify: one of the most well-known SaaS ecommerce platforms that enables small businesses to launch stores in minutes. 
• Salesforce: a powerful SaaS CRM solution used by over 150,000 companies. 
• Gmail / Google Workspace: widely used SaaS tools for communication and collaboration. 

SaaS is perfect for companies that need to move fast, don’t have a big IT team, and are satisfied with out-of-the-box functionality. It’s especially attractive for: 

• Startups and SMEs launching simple ecommerce stores 
• Companies looking for speed-to-market and lower upfront costs 
• Use cases where deep customization or infrastructure control isn’t necessary 

But SaaS comes with limitations, particularly when it comes to customization, data control, and business model flexibility. 

As BigCommerce points out, SaaS solutions often follow a one-size-fits-all logic: they’re optimized for mass adoption, not industry-specific needs. 

This makes SaaS less ideal for B2B ecommerce platforms, which often require advanced features like contract-based pricing, complex workflows, account hierarchies, and integration with legacy systems or ERPs. 

FaaS represents the highest level of abstraction in cloud computing. Unlike IaaS and PaaS, where you manage at least some part of the infrastructure or application layer, FaaS allows developers to deploy discrete pieces of code (functions) that are triggered on demand. There’s no need to manage servers, containers, or runtime environments. 

Popular FaaS providers include AWS Lambda, Azure Functions, Google Cloud Functions, and IBM Cloud Functions. These platforms handle everything from scaling to load balancing and maintenance, letting developers focus purely on business logic.

With FaaS, each function performs a single task and runs only when invoked. For example, a function might process a payment, resize an image, or send a confirmation email. You only pay for compute time during execution, which makes FaaS a cost-efficient model for intermittent workloads. 

According to Datadog's 2023 State of Serverless report, 70% of organizations using AWS already deploy Lambda functions as part of their cloud architecture, showing how widely adopted FaaS has become across industries. 

While FaaS is ideal for small, modular workloads, it hasn’t yet been widely adopted for full-scale ecommerce platforms. That’s because ecommerce requires persistent state management, complex workflows, and high levels of customization — challenges that aren’t easily addressed in a pure FaaS environment. 

That said, FaaS can support ecommerce microservices like: 

• Dynamic price calculation 
• Order confirmation emails 
• Inventory updates 
• Image processing 

Some composable and headless ecommerce platforms may use FaaS selectively for performance optimization, especially in JAMstack or MACH-based architectures.